In this episode of CIO Perspectives, Objectives vs. Benchmarks: Absolute Return Opportunities outside of AI, host Sid Ahl is joined by Dan Higgins, CIO of Marylebone Partners LLP, which recently became part of Brown Advisory, to discuss how investors can look for opportunities in a market increasingly shaped by AI and concentrated benchmarks.

Sid and Dan explore the similarities and differences between today’s AI-driven market and the dot-com era, how the rise of passive investing and changes in market structure are reshaping opportunities for active investors and why investment objectives should not be confused with benchmarks. They also discuss where Dan is finding opportunities outside the most crowded areas of the market, including international equities, select software companies, credit and commodities.

The conversation closes with a discussion of risk, the importance of maintaining a margin of safety and why overlooked areas of the market may warrant attention even as headline valuations remain elevated.

Highlights:

  • AI vs. the dot-com era: Where today’s market resembles the late 1990s and why differences in profitability, valuations and market structure matter.
  • Objectives vs. benchmarks: Why investors should distinguish between achieving their long-term goals and simply outperforming an increasingly concentrated index.
  • Looking beyond the U.S.: Where Dan sees potential opportunities across Japan, Korea, China and other international markets as capital remains heavily concentrated in U.S. assets.
  • Software under pressure: Why some companies labeled as potential AI losers may prove more resilient than the market expects.
  • Opportunities in credit: How dispersion beneath tight headline credit spreads may create opportunities for long-short and specialist investors
  • Selective commodity exposure: How structural supply and demand dynamics are shaping Dan’s views on areas such as copper and uranium.
 
PREVIOUS EPISODE

CIO Perspectives Podcast:
Midyear Market Outlook: AI, Inflation and Where Investors See Opportunity Listen now  

 


The views and opinions expressed in this podcast are those of the speakers and do not necessarily reflect those of Brown Advisory. These views are not intended to be and should not be relied upon as investment advice and are not intended to be a forecast of future events or a guarantee of future results. The information provided in this podcast is not intended to be and should not be considered a recommendation or suggestion to engage in or refrain from a particular course of action or to make or hold a particular investment or pursue a particular investment strategy, including whether or not to buy, sell or hold any securities mentioned. It should not be assumed that investments in such securities have been or will be profitable. To the extent specific securities are mentioned, they have been selected by the speakers on an objective basis to illustrate views expressed in the podcast and do not represent all the securities purchased, sold or recommended for advisory clients. The information contained herein has been prepared from sources believed reliable but is not guaranteed by us as to its timeliness or accuracy and is not a complete summary or statement of all available data. This piece is for informational purposes only and is not individually tailored for or directed to any particular client or prospective client.

Alternative Investments may be available for Qualified Purchasers and Accredited Investors only. 

Any return expectations are hypothetical, based on current market conditions and assumptions, and are not guarantees of future results. Actual returns may differ materially and may be lower or negative.

Alternative investments are generally available only to investors who meet applicable eligibility requirements, including accredited investor and qualified purchaser standards where applicable.

Credit spread percentile represents the percentile rank of the current option-adjusted spread relative to the index’s historical spread. 

Sources: Certain market, economic and company data referenced in this podcast are derived from Bloomberg®, Bureau of Labor Statistics (BLS), OpenRouter, public company filings, public news reporting and Brown Advisory analysis, as of the recording date unless otherwise indicated.

Sources: Certain market, economic and company data referenced in this podcast are derived from Robert Shiller data, Goldman Sachs Research, PitchBook, FINRA, Investment Company Institute, Kiplinger, Jay R. Ritter’s Initial Public Offerings: Updated Statistics (University of Florida), TD Asset Management, TD Epoch, Bloomberg Finance L.P., the U.S. Bureau of Economic Analysis, Reuters and Morningstar, as of the recording date unless otherwise indicated.
Absolute return investing is an investment approach focused on generating positive returns over time rather than outperforming a specific market benchmark.
Alpha is the excess return of an investment relative to a benchmark, after accounting for market exposure or risk.
Credit spread is the difference in yield between a corporate or other non-government bond and a comparable government bond, reflecting the additional compensation investors receive for assuming credit risk.
Downside protection refers to investment characteristics or strategies intended to reduce losses during periods of market decline.
Equity risk premium is the additional return investors expect to receive from owning equities relative to a risk-free investment.
Exchange-traded fund (ETF) is an investment vehicle that holds a basket of securities and trades on an exchange like a stock.
Free cash flow (FCF) is the cash a company generates after capital expenditures that can be used for dividends, buybacks or reinvestment.
Initial public offering (IPO) is the process through which a private company first offers its shares to public investors.
Margin of safety is the valuation cushion that may help protect against downside risk when an investment’s market price is below an investor’s estimate of its intrinsic value.
MSCI All Country World Index (MSCI ACWI) captures large- and mid-cap representation across developed and emerging markets. The Index covers approximately 85% of the global investable equity opportunity set. MSCI® and MSCI Indexes are trademarks and service marks of MSCI Inc. or its subsidiaries.
Producer Price Index (PPI) measures changes over time in the prices domestic producers receive for their output.
Renminbi (RMB) is the official currency of the People’s Republic of China.
Shiller cyclically adjusted price-to-earnings (CAPE) ratio is a valuation measure that compares the price of an equity market or security with its average inflation-adjusted earnings over the previous 10 years.
The S&P 500® Index represents the large-cap segment of the U.S. equity markets and consists of approximately 500 leading companies in leading industries of the U.S. economy. S&P® and S&P 500® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”), a subsidiary of S&P Global Inc. 
Special purpose acquisition company (SPAC) is a publicly traded company formed to raise capital through an IPO for the purpose of acquiring or merging with an existing private company.
Tokyo Stock Exchange (TSE) is a Japanese stock exchange that lists many of the country’s publicly traded companies.
Toronto Stock Exchange (TSX) is a Canadian stock exchange that lists companies across a range of sectors and is one of the largest stock exchanges in North America.